0000950146-95-000560.txt : 19950915 0000950146-95-000560.hdr.sgml : 19950915 ACCESSION NUMBER: 0000950146-95-000560 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19950630 ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19950914 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: NEW ENGLAND REALTY ASSOCIATES LIMITED PARTNERSHIP CENTRAL INDEX KEY: 0000746514 STANDARD INDUSTRIAL CLASSIFICATION: OPERATORS OF APARTMENT BUILDINGS [6513] IRS NUMBER: 042619298 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-12138 FILM NUMBER: 95573796 BUSINESS ADDRESS: STREET 1: 39 BRIGHTON AVE CITY: ALLSTON STATE: MA ZIP: 02134 BUSINESS PHONE: 6177830039 MAIL ADDRESS: STREET 1: 39 BRIGHTON AVE CITY: ALLSTON STATE: MA ZIP: 02134 8-K/A 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 ----------- FORM 8-K/A CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported): June 30, 1995 New England Realty Associates Limited Partnership ------------------------------------------------------------------------ (Exact Name of Registrant as Specified in its Charter) Massachusetts 0-12138 04-2619298 ------------------------------------------------------------------------ (State or Other Jurisdiction (Commission File (IRS Employer of Incorporation) File Number) Identification No.) 39 Brighton Avenue, Allston, Massachusetts 02134 ------------------------------------------------------------------------ (Address of Principal Executive Offices) (Zip Code) Registrant's telephone number, including area code: (617) 783-0039 ------------------------------------------------------------------------ (Former Name or Former Address, if Changed Since Last Report) Item 7. Financial Statements, Pro Forma Financial Statements. This item is amended to include the following: a) Combined Historical Summary of Revenues and Certain Expenses. Combined historical summary of revenues and certain expenses for the properties sold by Omnibus Realty Trust as of June 30, 1995 and report of Independent Certified Public Accountants thereon. b) Pro Forma Financial Information. Pro forma combined statement of operations for the six months ended June 30, 1995. Pro forma combined statement of operations for the year ended December 31, 1994. Pro forma combined balance sheet as of June 30, 1995. Pro forma estimated taxable combined operating results for the twelve months ended June 30, 1995. Pro forma estimated combined cash made available by operations for the twelve months ended June 30, 1995. Notes to pro forma financial statements. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. NEW ENGLAND REALTY ASSOCIATES LIMITED PARTNERSHIP (Registrant) Date: September 13, 1995 By: NewReal, Inc., its General Partner (functional equivalent of Chief Executive Officer and Principal Financial Officer) By: /s/ Ronald Brown ----------------------- Ronald Brown, President New England Realty Associates Limited Partnership Combined Historical Summary of Revenues and Certain Expenses for the Properties Sold by Omnibus Realty Trust as of June 30, 1995 and Report of Independent Certified Public Accountants New England Realty Associates Limited Partnership Index to Combined Historical Summary of Revenues and Certain Expenses for the Properties Sold by Omnibus Realty Trust as of June 30, 1995 ============================================================================== Page Report of Independent Certified Public Accountants 1 Combined Historical Summary of Revenues and Certain Expenses 2 Notes to Combined Historical Summary of Revenues and Certain Expenses 3 Report of Independent Certified Public Accountants To the Partners New England Realty Associates Limited Partnership We have audited the accompanying combined historical summary of revenues and certain expenses of the properties (historical summary) sold by Omnibus Realty Trust, as of June 30, 1995, to New England Realty Associates Limited Partnership, as described in Note 1, for each of the three years in the period ended December 31, 1994. This historical summary is the representation of the properties' management. Our responsibility is to express an opinion on the historical summary based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the historical summary is free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the statement of revenues and expenses. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial presentation of the historical summary. We believe that our audit provides a reasonable basis for our opinion. The accompanying historical summary was prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission (for inclusion in a filing on Form 8-K by New England Realty Associates Limited Partnership) and excludes certain material expenses, described in Note 1, that would not be comparable to those resulting from the proposed future operations of the properties, and is not intended to be a complete presentation of the properties' combined historical revenues and expenses. In our opinion, the historical summary referred to above presents fairly, in all material respects, the combined revenues and certain expenses, as described in Note 1, of the properties for each of the three years in the period ended December 31, 1994, in conformity with generally accepted accounting principles. /s/ Miller, Wachman & Co. Boston, Massachusetts September 8, 1995 New England Realty Associates Limited Partnership Combined Historical Summary of Revenues and Certain Expenses of the Properties Sold by Omnibus Realty Trust as of June 30, 1995 to New England Realty Associates Limited Partnership (as described in Note 1) for the years ended December 31, 1994, 1993 and 1992 and (unaudited) for the six months ended June 30, 1995 and 1994 ==============================================================================
Unaudited Unaudited 1994 1993 1992 6/30/95 6/30/94 ---------- ---------- ---------- ---------- --------- Revenues: Rental income $6,117,949 $5,851,287 $5,547,457 $3,215,705 3,031,266 Laundry and sundry income 133,865 122,424 85,904 78,028 54,100 ---------- ---------- ---------- ---------- --------- 6,251,814 5,973,711 5,633,361 3,293,733 3,085,366 ---------- ---------- ---------- ---------- --------- Certain expenses: Administration 231,405 164,070 272,747 166,592 123,332 Operating 906,348 930,615 904,384 525,149 496,082 Renting 238,241 222,282 270,966 60,584 74,430 Repairs and maintenance 897,107 740,303 585,732 464,148 409,080 Taxes and insurance 550,008 507,899 468,820 298,620 283,900 ---------- ---------- ---------- ---------- --------- 2,823,109 2,565,169 2,502,649 1,515,093 1,386,824 ---------- ---------- ---------- ---------- --------- Excess of revenues over certain expenses $3,428,705 $3,408,542 $3,130,712 $1,778,640 $1,698,542 ========== ========== ========== ========== ==========
See Notes to the Combined Historical Summary -2- New England Realty Associates Limited Partnership Notes to Combined Historical Summary of Revenues and Certain Expenses ============================================================================== Note 1 - Basis of Presentation On June 30, 1995, New England Realty Associates Limited Partnership (NERA) purchased from Omnibus Realty Trust five residential properties (Omni). The historical summary is the combination of the financial statements of the five properties acquired. The accompanying combined historical summary was prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission (for inclusion in a filing on Form 8-K by NERA) and excludes certain material expenses including interest expense, management fees, depreciation and amortization, and non-operating items that would not be comparable to those resulting from the proposed future operations of the Omni properties, and is not intended to be a complete presentation of the Omni properties' historical revenues and expenses. Note 2 - Rental Income Rental income of Omni is primarily from residential apartments with leases of one year or less. Rental income from commercial properties which have future rental income on noncancellable operating leases is as follows: 1995 $ 185,025 1996 179,017 1997 149,675 1998 113,300 1999 9,200 ----------- $ 636,217 =========== -3- New England Realty Associates Limited Partnership Unaudited Pro Forma Combined Financial Statements ============================================================================== The following unaudited pro forma combined statements of operations for the six months ended June 30, 1995 and the year ended December 31, 1994, give effect to the New England Realty Associates Limited Partnership (NERA) acquisition of Linhart Limited Partnership (Linhart) as of January 25, 1995 and certain properties acquired from Omnibus Realty Trust (Omni), as of June 30, 1995 as if such acquisitions had been completed at January 1, 1994. The historical information pertaining to Linhart is only for the period prior to its date of acquisition whereas the information pertaining to Omni is for the entire periods presented. Since the acquisitions are reflected in NERA's historical June 30, 1995 balance sheet, the unaudited pro forma combined balance sheet is only presented to give effect to certain debt restructurings that occurred subsequent to that date. The pro forma information is based on the historical financial statements of NERA, Linhart and Omni, giving effect to the transactions under the purchase method of accounting and the assumptions and adjustments described in the accompanying notes to the unaudited pro forma combined financial statements. The unaudited pro forma combined statements of estimated taxable operating results and estimated cash made available by operations for the twelve months ended June 30, 1995 have been based on similar assumptions and adjustments. These pro forma statements are not necessarily indicative of the results that actually would have been achieved if the acquisitions had occurred as assumed. They should be read in conjunction with the historical financial statements of NERA included in its Form 10-K for the year ended December 31, 1994 and its Form 10-Q for the six months ended June 30, 1995, and the historical operating summary of the Omni properties included elsewhere herein. New England Realty Associates Limited Partnership Unaudited Pro Forma Combined Statement of Income for the Six Months ended June 30, 1995 ==============================================================================
Historical Pro Forma -------------------------------- ------------------------------- NERA Linhart Omni Adjustments Combined ---------- ------- ---------- ------------- ---------- Revenues: Rental income $4,519,007 $34,965 $3,215,705 $7,769,677 Laundry and sundry income 68,526 504 78,028 147,058 ---------- ------- ---------- ---------- 4,587,533 35,469 3,293,733 7,916,735 ---------- ------- ---------- ---------- Expenses: Administrative 314,689 8,769 166,592 490,050 Depreciation and amortization 853,114 $587,672 (1) 1,462,689 34,398 (2) (12,495)(2) Interest 1,060,782 935,090 (1) 2,319,620 988,575 (2) (664,827)(2) Management fees 198,853 131,749 (1) 330,602 Operating 470,807 367 525,149 996,323 Renting 72,189 1,173 60,584 133,946 Repairs and maintenance 745,012 7,031 464,148 1,216,191 Taxes and insurance 540,319 238 298,620 839,177 ---------- ------- ---------- ----------- ---------- 4,255,765 17,578 1,515,093 2,000,162 7,788,598 ---------- ------- ---------- ----------- ---------- Income (loss) from operations 331,768 17,891 1,778,640 (2,000,162) 128,137 ---------- ------- ---------- ----------- ---------- Other income: Interest income 25,023 25,023 Income from investments in partnerships and joint venture 8,852 8,852 ---------- ---------- 33,875 33,875 ---------- ---------- Net income (loss) $365,643 $17,891 $1,778,640 ($2,000,162) $162,012 ========== ======= ========== ============ ========== Net income (loss) per unit $2.06 $0.91 ========== ========== Weighted average number units outstanding 177,152 177,152 ========== ==========
See Notes to Unaudited Pro Forma Combined Financial Statements New England Realty Associates Limited Partnership Unaudited Pro Forma Combined Statement of Income for the Year ended December 31, 1994 ==============================================================================
Historical Pro Forma ------------------------------------ ------------------------------ NERA Linhart Omni Adjustments Combined ---------- -------- ---------- -------------- ----------- Revenues: Rental income $8,384,546 $391,864 $6,117,949 $14,894,359 Laundry and sundry income 121,649 17,698 133,865 273,212 ---------- -------- ---------- ----------- 8,506,195 409,562 6,251,814 15,167,571 ---------- -------- ---------- ----------- Expenses: Administrative 550,142 12,127 231,405 793,674 Depreciation and amortization 1,636,390 $1,243,869 (3) 2,924,065 (24,989)(4) 68,795 (4) Interest 1,672,035 1,997,482 (3) 4,656,829 (903,746)(4) 1,891,058 (4) Management fees 339,668 267,825 (3) 607,493 Operating 890,885 65,608 906,348 1,862,841 Renting 149,310 2,941 238,241 390,492 Repairs and maintenance 1,359,490 60,039 897,107 2,316,636 Taxes and insurance 1,060,295 75,862 550,008 1,686,165 ---------- -------- ---------- -------------- ----------- 7,658,215 216,577 2,823,109 4,540,294 15,238,195 ---------- -------- ---------- -------------- ----------- Income (loss) from operations 847,980 192,985 3,428,705 (4,540,294) (70,624) ---------- -------- ---------- -------------- ----------- Other income: Interest income 51,826 51,826 Income from investments in partnerships and joint venture 42,745 42,745 Other 130,000 130,000 ---------- ----------- 224,571 224,571 ---------- ----------- Net income (loss) $1,072,551 $192,985 $3,428,705 ($4,540,294) $153,947 ========== ======== ========== =========== =========== Net income per unit $6.05 $0.87 ========== =========== Weighted average number units outstanding 177,344 177,344 ========== ===========
See Notes to Unaudited Pro Forma Combined Financial Statements New England Realty Associates Limited Partnership Unaudited Pro Forma Combined Balance Sheet June 30, 1995 ==============================================================================
Historical Pro Forma ----------- -------------------------- ASSETS NERA Adjustments Combined ----------- ------------ ----------- Rental Properties $70,027,288 $70,027,288 Less Accumulated Depreciation (14,770,319) (14,770,319) ----------- ----------- Net Rental Properties 55,256,969 55,256,969 Cash and Cash Equivalents 800,860 $1,303,000 (5) 2,103,860 Short-term Investments 47,399 47,399 Rents Receivable 588,063 588,063 Real Estate Tax Escrows 153,268 153,268 Prepaid Expenses and Other Assets 1,797,139 1,050,000 (5) 2,847,139 Investment in Joint Venture 141,419 141,419 Financing and Leasing Fees 739,932 250,000 (5) 888,761 (101,171)(6) ------- -------- ----------- $59,525,049 $2,501,829 $62,026,878 =========== ========== =========== LIABILITIES AND PARTNERS' CAPITAL Mortgages Payable $50,388,784 ($7,517,000)(5) $52,991,784 10,120,000 (5) Accounts Payable and Accrued Expenses 381,100 381,100 Advance Rental Payments and Security Deposits 586,909 586,909 ------- ------- 51,356,793 53,959,793 Partners' Capital: 177,152 units outstanding 8,168,256 (101,171)(6) 8,067,085 --------- -------- --------- $59,525,049 $2,501,829 $62,026,878 =========== ========== ===========
See Notes to Unaudited Pro Forma Combined Financial Statements New England Realty Associates Limited Partnership Unaudited Pro Forma Combined Estimated Taxable Operating Results for the Twelve Months ended June 30, 1995 ==============================================================================
Pro Forma Combined ----------- Revenues: Rental income $15,437,939 Laundry and sundry income 285,871 ------- 15,723,810 ---------- Expenses: Administrative 881,143 Depreciation and amortization 2,690,231 Interest 4,635,796 Management fees 635,152 Operating 1,833,630 Renting 335,325 Repairs and maintenance 2,413,994 Taxes and insurance 1,679,153 --------- 15,104,424 ---------- Income from Operations 619,386 ------- Other Income: Interest income 52,165 Loss from investments in partnerships and joint venture (155,823) -------- (103,658) -------- Taxable Income $515,728 --------
See Notes to Unaudited Pro Forma Combined Financial Statements New England Realty Associates Limited Partnership Unaudited Pro Forma Combined Estimated Cash Made Available By Operations for the Twelve Months ended June 30, 1995 ==============================================================================
Pro Forma Combined ----------- Revenues: Rental income $15,437,939 Laundry and sundry income 285,871 ------- 15,723,810 ---------- Expenses: Administrative 881,143 Interest 4,635,796 Management fees 635,152 Operating 1,833,630 Renting 335,325 Repairs and maintenance 2,413,994 Taxes and insurance 1,679,153 --------- 12,414,193 ---------- Cash from Operations 3,309,617 --------- Other Income: Interest income 52,165 Income from joint venture 28,177 ------ 80,342 ------ Estimated Cash Made Available by Operations $3,389,959 ==========
See Notes to Unaudited Pro Forma Combined Financial Statements New England Realty Associates Limited Partnership Notes to Unaudited Pro-Forma Combined Financial Statements ============================================================================== Note A Acquired Properties and Mortgages The acquired properties were purchased by Limited Partnerships which each are 99.67% owned by NERA. The acquisition was financed by mortgages on the acquired properties and funds obtained from additional mortgages of existing NERA properties. The properties were acquired from trusts owned nominally by the majority shareholder of NERA's general partner. In substance, the properties were owned by the trusts' secured lenders under a 1991 restructuring agreement whereby the lender received all of the operating income from the properties as well as the proceeds from the sale to NERA. The partnership has recorded the purchase at the amount paid for the properties. Under this restructuring agreement, an entity owned by the majority shareholder of NERA's general partner will receive a $300,000 commission from the holder of the Omni debt. The following is a summary of the transaction.
Acquiring Commercial Mortg. Limited Location Resed. Space on Acq. Partnership of Property Units (Sq.Ft.) Cost Property ----------- ----------- ----- -------- ---- -------- 1. Boylston Downtown L.P. 62 Boylston St., Boston, MA 269 15,550 $ 10,560,000 $ 7,860,000 2. Commonwealth 1144 L.P. 1144-1160 Comm.Ave., Boston, MA 261 0 7,050,000 5,348,000 3. Redwood Hills L.P. 376-384 Sunderland Rd, Worcester,MA 180 0 6,000,000 4,627,000 4. North Beacon 140 L.P. 140-154 North Beacon St., Boston, MA 64 1,050 4,680,000 3,512,000 5. Commonwealth 1137 L.P. 1131-1137 Comm.Ave., Boston, MA 35 0 1,710,000 1,280,000 ---- ------ -------- -------- Total Omni 809 16,600 $ 30,000,000 $22,627,000 6. Linhart L.P. 4-34 Lincoln St., Newton, MA 9 21,223 1,925,000 1,329,000 ---- ------ --------- --------- Total 818 37,823 $ 31,925,000 $23,956,000 === ====== ============ ===========
Additional funds were provided by 10 mortgages on refinanced or debt free properties totaling approximately $22,000,000. Four of these mortgages totaling approximately $10,120,000 were closed subsequent to June 30, 1995 and have been reflected in the pro forma adjustments. Approximately $11,800,000 was used to repay existing debt and $7,969,000 was used in the acquisition of the above properties. The total aggregate monthly payment on all of the above debt is approximately $360,000 including interest at 8 3/8%, through September 2005 based upon a 27.5 year amortization period. The remaining unpaid principle of approximately $39,000,000 is due in 2005. New England Realty Associates Limited Partnership Notes to Unaudited Pro-Forma Combined Financial Statements ============================================================================== Note A Acquired Properties and Mortgages (cont'd) The mortgages are collateralized by the individual parcels of real estate. An indemnity and guarantee agreement (Indemnity) exists between NERA and the Lender whereby NERA guarantees payment of lender losses arising from waste committed on the secured property, failure to pay valid taxes and assessments, violation of environmental laws and non payment of security deposits and other operating items as defined in the agreement. The lender requires that an escrow account be established and funded monthly to pay for major repairs and improvements. Approximately $28,000 was escrowed at the mortgage closings and additional monthly payments of approximately $28,000 are required. Consistent with its capital improvement program, NERA anticipates spending approximately $500,000 on major additional repairs and improvements on all its properties during the remainder of 1995. Note B Depreciation and Amortization The purchase price of the acquired properties was allocated as follows: Cost Depreciable Lives ---- ----------------- Land $ 6,385,000 - Buildings and improvements 24,540,000 25 years Kitchen appliances and carpets 1,000,000 5 years ----------- $31,925,000 =========== Deferred financing fees are being amortized over the term of the related mortgage. Note C Income Taxes At June 30, 1995, NERA has cumulatively deducted tax losses in excess of book income of approximately $2,500,000. Approximately $2,000,000 of this amount relates to losses on investments in partnerships. Upon the sale or disposition of these investments, taxable income will be increased by the amount of the excess prior years' tax losses. New England Realty Associates Limited Partnership Notes to Unaudited Pro-Forma Combined Financial Statements ============================================================================== Note D Pro Forma Adjustments As a result of the foregoing, the following adjustments were made in the preparation of the pro forma financial statements. Dr. Cr. --- --- 1. Depreciation and amortization $587,672 Interest 935,090 Management fees (4% of pro forma combined) 131,749 To record proforma expenses for 5 properties acquired in 1995. 2. Interest 988,575 Amortization of deferred charge 34,398 Interest (historical) $664,827 Amortization of deferred charge (historical) 12,495 To record pro forma expenses related to total mortgages outstanding after 1995 acquisitions and refinancings, and to eliminate the historical amounts. 3. Depreciation & amortization 1,243,869 Interest 1,997,482 Management fees 267,825 To record proforma expenses for 6 properties acquired in 1995. 4. Interest 1,891,058 Amortization of deferred charge 68,795 Interest (historical) 903,746 Amortization of deferred charge (historical) 24,989 To record pro forma expenses related to total mortgages outstanding after 1995 acquisitions and refinancings, and to eliminate the historical amounts. 5. Cash and cash equivalents (Refinancing cash due) 1,303,000 Prepaids & other assets (Cash heldback) 1,050,000 Financing and leasing fees (Deferred Financing Costs) 250,000 Mortgages payable (Existing) 7,517,000 Mortgages payable (Refinancing) 10,120,000 To record pro forma refinancing of 4 mortgages subsequent to June 30, 1995. 6. Partners' capital 101,171 Financing and leasing fees 101,171 To eliminate the deferred charges on the refinanced mortgages.